Division of Assets

Division of Assets and Debts in Divorce or Legal Separation  

Dividing your assets and debts during your divorce or legal separation is an important part that directly impacts your financial future. This affects not only the spouses but also the children involved as a result of the relationship. In situations where one or both individuals are of high net-worth, proper division of assets ensures that there is an amicable split of previously or jointly owned assets and debts.

In California, community property laws are put in place to ensure that your property is divided equally. In many cases, there are complexities when determining the classification and value of assets. At Matevosyan Law Group, our team of property division lawyers is experienced in dealing with many divisions of asset and debt cases as they relate to divorce and legal separation. Our family law attorneys are committed to helping you get a fair resolution tailored to your collective property.

Characterization of Property

During a marriage, property comes in many forms. Your family law attorney starts a discovery process to find out what the family estate consists of. This knowledge helps your divorce lawyer deal with property settlements effectively. 

This is split into community and separate property assets and debts.

How Property is Divided

Under California law, a marriage where a couple acquires assets and debts during the lifespan of the union is considered community property.

This community property and debts are further divided between spouses during a divorce. 

● Community property: These are earnings made from employment and all assets acquired from those earnings during marriage.

● Separate property: These are the assets both spouses own before marriage. Separate property also includes any gifts or inheritances received solely by one spouse (for that spouse, not a shared gift), even during the marriage.

 How Debts are Divided

Debt accrued during marriage is also broken down and classified as community or separate debt under California Law. With the information gained from who and how the debts are incurred, the court can decide what to do with it during divorce.

● Community debts: Any debts incurred during the duration of the marriage are the responsibility of both parties.

● Separate debts: Any debts incurred by either spouse, before marriage or after spouses are separated are the responsibility of whoever incurred them.

There are several intricacies to dividing property and debts during a divorce. From discovery and valuation to division of assets and agreement, this process should be handled by a divorce lawyer experienced in handling these types of family law cases.

Matevosyan Law Group’s family law attorneys are conscious of separate property rights and strive to ensure that these rights are protected during the division process.

Exceptions to community property classification

Apart from separate property, there are other exceptions to the classification of community property. 

These include;

● Student loans: Usually treated as separate property. In the event of a divorce, student loans are paid by the spouse who took out the loan.

● Personal injury awards: This is compensation paid to a personal injury victim. Though treated as community property if the injury happens during the marriage, the court may assign the damages directly to the injured party.

● Prenuptial agreements: If a couple enters a valid prenuptial agreement, they have opted out of California’s community property system. In this case, they are beholden to the agreement.

● Other examples include business and professional goodwill earned during marriage, funds borrowed during marriage, and goods bought on credit during marriage. 

As clear as these exceptions may be, there are specific situations that blur the line between community and separate property. In these unique cases, it is best to contact Matevosyan Law Group’s family law attorneys to clarify these situations.

Retirement Accounts  

Retirement account funds earned during marriage in California are considered community property and are divided equally between spouses during a divorce.

Contribution Plans 

Contribution plans like 401(k)s, 403(b)s, and 457s, are valued based on the funds in the plan. They are shared immediately by paying money to one spouse or rolling the funds into another retirement plan. 

Pensions

Pensions are complicated because, unlike other plans, their value is not fixed. A formula is utilized to determine the marital portion of the benefit, including the years of service during the marriage, total years of service, compensation, and possible other factors to calculate the marital portion of the benefit.

There are different approaches to retirement accounts during a divorce. It is essential to get the help of an experienced divorce lawyer to handle the division of assets and property to ensure a fair division. 

Family Residence  

Family residence, under California’s laws, is treated as community property. Your house belongs to both of you in almost all cases. If you bought your house during the marriage, you both have a claim to the house, even if only one spouse worked and paid for it. 

If your house was bought by either you or your spouse with separate funds before you got married and fully paid off prior to marriage, then the house belongs to the person who bought it. However, the community may have an interest if community earnings were used to pay down the mortgage on the separate property residence during marriage.

Because your family residence is an important piece of your life, whether for you or your children, it is important to understand the emotional and financial impact of your residence during the division of assets. Our divorce lawyers are well-versed in helping you understand the intricacies of dividing your assets, especially your family residence, to ensure a fair judgment.

Business  

In California, if you own or co-own a business with your spouse during your marriage, it is considered community property. This business is split equally between spouses if you choose to get a divorce.

Regardless of who started the business or how involved any of the spouses are in its day-to-day operations, the judge will split ownership of the business 50/50.

As with other assets, there are exceptions under the subsection of business ownership during a divorce. There are also ways to resolve the division of a business during a divorce. These include;

● Outright sale of the business and sharing the profits earned

● Choosing to co-own the business with your spouse

● A spouse completely buying out the other spouse’s ownership interest with the value of other marital assets

● One spouse granting the other the right to half the profits while retaining control over business decisions 

When dividing a business, it’s important to consider the business’s current value, projected profits, and how a change in ownership may affect these details. Mistakes in business valuation can have a significant impact on the division of assets. 

At Matevosyan Law Group, we understand how complex and physically and emotionally exhausting the entire divorce process is. When it comes to the division of property, assets, and debts, the process becomes infinitely more challenging. This is why we are committed to guiding our clients through a fair and thorough process of division of assets and debts.

If you’re going through a divorce or legal separation and need the services of a family law attorney, reach out to the Matevosyan Law team for a personalized legal support service through the asset division process.